During a New Year’s press conference on Jan. 31, Lee Jae-myung, the leader of the Democratic Party, proposed a ‘birth basic income’ as an extraordinary measure to address the low birth rate crisis. He proposed a ‘birth basic income’ that includes a split payment system to alleviate the burden of the young generation. He brought up his “basic income” series again ahead of the general election on April 18. Lee said the policy he unveiled on that day is in addition to the “comprehensive measures for the declining birthrate” announced by the Democratic Party as a general election pledge.
These measures include lending 100 million won($74 thousand) to all newlywed couples as ‘marriage and childbirth support funds’, with a 50% principal reduction for families with two children and a complete waiver for those with three.
The plan also involves providing public rental housing of 79.34㎡ for families with two children and 109.091㎡ for those with three, depositing $74 thousand monthly into a fund for every child until the age of 18, and paying a child allowance of $149.9 per month per child up to the age of 17.
According to estimates by the Democratic Party, implementing the aforementioned policy would require an annual budget of $20.9 billion. Additionally, Lee plans to expand it by introducing a ‘birth basic income’ and supporting all education costs, including college tuition. However, the proposal to provide a ‘birth basic income’ to every household with children and cover college tuition fees would require a significant amount of resources.
However, he did not clarify the source of funding for this proposal. While there are many policy ideas to address the low birth rate issue, infeasible policies are just political propaganda used as vote-winning propositions without practical implementation. In other words, Lee’s proposal may not be possible in reality.
Lee used to introduce his ‘basic income series’ during every election season. When he ran for President, he made a promise to pay a basic income of $749.4 per person every year. Additionally, he suggested providing an extra $749.4 annually to seven million youths aged 19-29. Lee also proposed a ‘basic finance’ program, providing $7493.8 loans to every citizen at ultra-low interest rates.
One of the reasons the Democratic Party lost the last presidential election and handed over the government for 5 years was due to the increase in national debt by $299.7 billion, which was caused by various populist policies. In spite of the previous failure, they are reintroducing the basic income series in this general election.
According to a paper that will be presented at the ‘2024 Economics Academic Conference,’ generations born after 2000 will have to pay 40% of their lifetime income in taxes to repay the national debt and afford fiscal expenditures. Lee’s argument essentially suggests that he will distribute money through taxes, which could be ironic for the youth who will be burdened by taxes.
